- Cash offers have become more prevalent as buyers compete with each other and investors for properties.
- Sellers often prefer the speed and reliability of all-cash offers over traditional financing.
- Here are six companies that offer regular people the chance to make all-cash offers.
- This article is part of "The Road to Home" series focused on helping first-time homebuyers navigate the daunting and exhilarating process of purchasing a home.
In today's red-hot housing market, regular people are searching for ways to gain equal footing with deep-pocketed investors and wealthy homebuyers who are flush with cash.
A growing number are turning to companies that help them make all-cash offers, giving them a better chance of landing their dream homes.
With supply constrained and demand high, home prices are continuing to rise. They hit an all-time peak last month, with the median home price in the US reaching $392,000, according to Realtor.com.
With all that competition, all-cash offers have risen in popularity, even among regular buyers.
Sellers often prefer all-cash offers over traditional financing, since cash provides more certainty that the deal will close quickly with no hiccups. A study from real-estate brokerage firm Redfin found that buyers who submit all-cash offers for a home nearly quadruple their chances of winning a bidding war.
Last July, 23% of homes were purchased with all-cash offers, up from 16% the year prior, according to the National Association of REALTORS. Yes, some of those all-cash offers come from investors and deep-pocketed buyers with funds from a recent home sale, but part of the uptick is due to a growing number of companies providing services to help regular people make all-cash offers.
The process is fairly straightforward — once one of these companies pre-approves you for a mortgage, they'll work with you to find a home and purchase it with cash on your behalf. Then you'll buy it back from them once your traditional mortgage closes.
Other companies, including Knock and Opendoor, operate using a slight variation on that process called cash-backed offers. They guarantee to fund your loan with cash on the closing date, even if your mortgage isn't 100% clear to close, giving buyers the certainty that comes with making all-cash offers.
Some of these cash-offer companies charge transaction fees as a percentage of the home price, but those fees can be waived if you use that same company to get your long-term mortgage, since the company then makes money by originating your loan.
In order to qualify for an all-cash offer, you'll need to provide the kind of information that you'd give to any other mortgage company in order to get a loan, such as credit history, bank statements, and tax returns. You'll also need to make an earnest money deposit to show that you're committed to buying the home, which is then applied to your down payment.
Some of these companies only operate in certain states, and the fees and requirements for all-cash offers vary.
Mike Delprete, a scholar-in-residence at the University of Colorado Boulder who studies the intersection of tech and real estate, said he expects this model to keep growing. The more people lose out to all-cash offers, the more they'll be incentivized to work with a company to make one themselves, reinforcing the cycle.
"Right now it's really hard to buy homes, and anything — anything — you can do to sweeten your offer, or at least reduce risk, is of hyper importance," said Delprete, who is also an investor and advisor for Homeward, one of the companies offering this service.
Here are six companies that are helping buyers make all-cash offers on their dream homes.
Ribbon
Ribbon, founded by technology investor Shaival Shah in 2017, offers a cash-offer product with a fee that ranges from 1% to 3.25%, depending on how soon after the sale the buyer secures a mortgage.
So for a $350,000 home, the typical price in the US, with a 5% down payment and a $332,500 mortgage, the fee would come out to between $3,325 and $10,806.
Ribbon itself does not offer long-term mortgages, something Ribbon spokesperson Sean Piazza said is part of what makes it unique. The company does not have a lending arm or a brokerage house, as part of its founding mission is to eliminate impact on small lending and brokerage businesses, Piazza said in a statement.
The company currently operates in some of the hottest housing states across the Southeast and Midwest: North Carolina, South Carolina, Georgia, Florida, Alabama, Texas, Tennessee, Missouri, and Indiana. It plans to announce expansion into new states soon, Piazza said.
Flyhomes
Flyhomes is a brokerage firm and all-cash offer provider based on the West Coast that aims to help first-time homebuyers secure a home through its services.
While other firms charge a fee, Flyhomes does not. It launched its most recent no-cost, all-cash offer product in December, which subsidizes $1,200 to $11,500 in additional mortgage closing costs after the offer is made.
This is funded through a portion of the broker commission paid to Flyhomes by the buyer.
The company operates in Washington, California, Oregon, Texas, Colorado and Massachusetts.
Orchard
Orchard offers an all-cash product specifically designed for first-time homebuyers, which also has no fee associated with it.
The company operates in Colorado, Georgia, Maryland, North Carolina, Texas, Virginia, and Washington, DC. Orchard will start offering the product in Oregon later this month, according to spokesperson Mandy Menaker.
Better
Known primarily for offering quick and relatively simple online mortgages, Better also gives homebuyers the chance to make all-cash bids on homes through its Better Cash Offer program.
In order to use Better Cash Offer, you'll need to start by working with one of Better's in-house real-estate agents. You'll also need to get pre-approved for a mortgage through Better Mortgage, the company's lending arm. Once you've done that, you'll be able to make an all-cash offer on a home.
There's no fee to use Better Cash Offer if you also get a mortgage with the company. But if you use another lender, you'll pay Better a transaction fee equal to 2.5% of the price you're paying for your home.
Better Cash Offer is currently available in 17 states and Washington DC. Check the company's website for a full list of available locations.
The online mortgage startup made headlines in late 2021 when CEO Vishal Garg abruptly laid off 900 employees over Zoom, a video of which went viral and sparked intense criticism. Better is now reportedly laying off an additional 3,000 employees, but the cash-offer service is operating as normal, a Better spokesperson told Insider.
Homeward
Homeward offers two main services: "buy with cash," for homebuyers just looking to upgrade their bids to all-cash offers; and "buy before you sell," which caters to homebuyers who want to secure their next home before selling their current one.
In each of the four states where Homeward's "buy with cash" offering is available — Arizona, Colorado, Texas, and Georgia — the company charges a fee of 1.9% of the home price for its service.
However, if you use Homeward Mortgage as your lender, the company offers a discount that effectively reduces the fee to zero. Homeward allows you to use any real-estate agent as your broker.
Accept.inc
Adam Pollack, the co-founder and CEO of Accept.inc, told Insider he wants to give all homebuyers a "superpower" — the ability to make cash offers.
Accept.inc provides an online portal for homebuyers to get pre-approved to make cash offers, a process that can take as little as 24 hours for customers who qualify
Accept.inc then buys your chosen home on your behalf and sells it back to you once your mortgage closes.
Accept.inc is a lender, so you have to get a mortgage through the company in order to take advantage of its all-cash offers. The company touts its lack of additional transaction fees and will work with any real-estate agent of your choosing.
Accept.inc is currently only available in Colorado, a spokesperson said, but is actively exploring new markets nationwide.